How to open a bank account in Canada: A newcomer’s guide

As a new citizen of Canada, there are a bunch of steps to take to fully settle in as you create this next chapter of your life. Getting a Canadian driver’s license, finding a family doctor, and opening a bank account are among the important tasks to complete in order to establish yourself in Canada, and help keep your life running smoothly.

A bank account is crucial if you are working towards buying a home to start building your credit. Your employer will need a way to make payments, and you will need an account before doing any investing. It’s also a practical way to get a credit card.

This article explains how to open a bank account as a newcomer to Canada.

• Choosing the right bank and account type
• Types of financial institutions in Canada
• Types of bank accounts in Canada
• Documents required to open a bank account
• Steps to open a bank account

Choosing the right bank and account type

When choosing where to do your banking and which type of account to choose, it's important to consider factors such as:

• Banking fees

• Banking services

• Accessibility

• Special packages and promotions for new bankers

Types of financial institutions in Canada

The Big Five

There are 5 major banks in Canada, known as the “Big Five”. These five banks control around 85% of the country’s banking industry. 

RBC: The Royal Bank of Canada

TD: Toronto Dominion Bank

BMO: Bank of Montreal

Scotiabank: The Bank of Nova Scotia

CIBC: Canadian Imperial Bank of Commerce

Credit Unions

Credit unions are full-service banking cooperatives.

The main difference between banks and credit unions is that banks exist to make a profit from shareholders who earn dividends, while credit unions are member-owned, not-for-profit co-ops.

Online Banks

Online banks function as a service without physical locations or branches.

Members can do their banking through websites or apps. Account statements and other paperwork can be downloaded and printed for accounting and income tax returns.

Types of bank accounts in Canada

There are three main types of bank accounts in Canada:

Checking

This account is for daily spending and transactions, including online purchases and monthly subscriptions.

Savings

These accounts are for earning interest on deposits and keeping money out of your checking account so that you don’t spend it.

Newcomer accounts

Many banks offer specialized accounts for newcomers that include perks such as fee waivers and free transactions.

Documents required to open a bank account

Naturally, financial institutions require more than one piece of I.D. to open a bank account.

• Primary ID: This can be a passport, Permanent Resident Card, or a work/study permit.

• Secondary ID: This can be a Canadian driver’s license, a utility bill, or a SIN card.

Banks may ask for proof of address, especially if you are applying for a credit card.

Steps to open a bank account

Step 1: Do your research

Do some thorough research and compare the different banks in Canada. Some banks offer deals for new bankers that are hard to ignore. Research where different banks invest mutual funds, to find out if the investments align with your values.

Step 2: Book an appointment

While walk-ins are possible to open a bank account, it's recommended to call and make an appointment. Of course, this step doesn’t apply if you are planning to open an online bank account.

Step 3: Meet with a banking advisor

This important first meeting will allow the advisor to verify your identity and documents. They will then inform you of various account features and the fees attached to each type of account. Finally, they will have you sign the paperwork and issue you a temporary debit card. Your official debit card with your full name will arrive in the mail within 6-14 business days.

Step 4: Set up your online banking

Banks and most credit unions offer a user-friendly app where you can perform many banking tasks from your phone or computer. To set up online banking, you must first activate your bank account by using your debit card. You can then download your institution’s mobile app, and set up your PIN and password. Your temporary debit card then immediately becomes deactivated.

Managing your bank account

It's important to keep track of banking fees and minimum balance requirements for all of your accounts.

Online banking is convenient for the following tasks:

• Bill payments

• Balance transfers

• Account Transfers

• Budgeting

You may find it worthwhile to pay a small amount of money for overdraft protection, to avoid potential overdraft fees.

Overdraft protection allows you to make transactions even when your account balance is low. It works by linking your checking account to another account, like a savings account or line of credit.

When you make a transaction that overdraws your checking account, the bank can automatically transfer money from the linked account to cover the difference.

Lastly, be sure to keep in mind that you build your credit history by using credit cards and other financial products responsibly. As long as you never miss an interest payment, or, even better, you pay down your credit card debt immediately, your credit will continue to increase.